Apple Earnings Season: Tune Up the Models, Ramp up the Rumors

By Tiernan Ray

It’s that time of the season: With Apple (AAPL) expected to report fiscal Q3 next Tuesday, July 23rd, predicting the quarter and refining estimates got into full swing today.

The Street is modeling $35.02 billion and $7.33 per share.

Apple shares today rose 13 cents to close at $430.44.

Stifel Nicolaus‘s Aaron Rakers, who has a Buy rating on Apple stock, and a $600 price target, $34.97 billion and $7.38 per share, on sales of 25.5 million iPhones and 21.1 million iPads, of which 14.6 million units may be for the iPad mini, more than he had expected at the start of this year.

I should note, too, that today was a particularly busy day for Apple rumors.

The Boy Genius Report’s Jonathan Gellerspeculated that the next iPhone will use an extremely durable form of metal casing that will make it near invulnerable, based on technology from Liquidmetal Technologies (LQMT). He likens the next crop of smartphones to the “Vertu” line of handsets once sold by Nokia (NOK) for thousands of dollars a pop, which used Liquidmetal’s technology, but instead designed for mass production for the mainstream consumer:

BGR exclusively revealed various components from the upcoming iPhone 5S in a report back in May, and besides the fact that it looks like Apple is going to offer a gold iPhone (something that myself and Anostyle made hot), there was something else I noticed about the SIM tray but couldn’t put my finger on. These trays were not cut out of aluminum… they looked injection molded. But out of what? Well I finally figured out what they are — they are manufactured out of LiquidMetal and I remembered why I knew this in the back of my mind… because I have already owned several phones that were made out of LiquidMetal — Vertus.

In the same vein, staff at Electronistareported late yesterday that there was a U.S. patent awarded to an entity called Crucible Intellectual Property, which seemed to be a joint venture of Apple and Liquidmetal, which patent suggested the companies might have much broader uses in mind for the metal alloy.

As the site’s authors write,

Patent number 8,485,245 B1 for a “Bulk amorphous alloy sheet forming process” was awarded on July 16. From the patent filing, Liquidmetal “can be valuable in the fabrication of electronic devices.” Specifically, the patent names iPhones,” “portable web-browser (e.g. iPad),”computer monitors, and portable music players as likely targets for the material. The filing also mentions that it could be used in a “watch or a clock,” suggesting that Apple may be thinking of using the material in a future “smartwatch” device it has been rumored to be working on.

The Financial Times‘s Courtney Weaver and Daniel Thomas today reported that Russia’s three largest mobile phone operators, MTS, Megafon and VimpelCom, “have all separately ended their contracts with Apple, arguing that they were unable to make a profit on the phones,” citing company remarks. The article notes that Apple sells phones in Russia through its own retail presence and through retail distributors, and that the carriers may negotiate new arrangements with Apple.

And a report by Bloomberg‘s Argin Chang stating the Chinese-langage Commercial Times claimed Apple may delay the next version of its iPhone, the rumored iPhone 5S, because it is going to use a larger screen size of 4.3 inches.

Raymond James‘s Tavis McCourt, who has a Strong Buy rating on Apple stock, and a $600 price target, weighed in on the rumor of an iPhone delay:

Apple is always pushing the envelope on cutting edge materials, components, assembly processes, etc., and this puts more supply chain risk into massive global launches than for many other smartphones. As with most stories, we suspect there is a grain of truth to recent stories written about issues with integration of fingerprint sensors or other component issues. However, it’s important to note that Apple and all smartphone manufacturers face these issues every year, and these stories have become annual “rites of passage” for technology journalists it appears. Importantly, damage done by launch delays or tight supply at Apple tend to be much less than at other handset vendors due to its power in the supply chain to procure components, and its sticky customer base, which tends to wait for the next iPhone, not the next smartphone, to upgrade (iPhone 4S is the classic example).

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JULY 18, 2013 12:05 A.M.

Anonymous wrote:

Good show. Glad you mentioned Liquidmetal... The guy at Mötley Fool was saying today in a video that Samsung has raised the bar again because of their new Galaxy S4 whatchamacallit that's shockproof and can also film the Banana fish underwater...

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.